Baramlay (Agriculture - European Agricultural Fund for Rural Development (EAFRD) - Aid for the establishment of young farmers - Judgment) [2024] EUECJ C-6/23 (11 April 2024)

Judgment This request for a preliminary ruling concerns the interpretation of Article 64(1), (2) and (4) and Article 77(1), (2) and (4) of Regulation (EU) No 1306/2013 of the European Parliament and of the Council of 17 December 2013 on the financing, management and monitoring of the common agricultural policy and repealing Council Regulations (EEC) No 352/78, (EC) No 165/94, (EC) No 2799/98, (EC) No 814/2000, (EC) No 1290/2005 and (EC) No 485/2008 (OJ 2013 L 347, p. 549), as well as Article 50(3) of Regulation (EU) No 1307/2013 of the European Parliament and of the Council of 17 December 2013 establishing rules for direct payments to farmers under support schemes within the framework of the common agricultural policy and repealing Council Regulation (EC) No 637/2008 and Council Regulation (EC) No 73/2009 (OJ 2013 L 347, p. 608). The request has been made in proceedings between X and the Agrárminiszter (Minister for Agriculture, Hungary) concerning the obligation to repay the full amount of the support for the setting up of young farmers from which X benefited. Legal context European Union law Regulation (EC) No 1698/2005 Council Regulation (EC) No 1698/2005 of 20 September 2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) (OJ 2005 L 277, p. 1) was repealed by Regulation (EU) No 1305/2013 of the European Parliament and of the Council of 17 December 2013 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) and repealing Council Regulation (EC) No 1698/2005 (OJ 2013 L 347, p. 487). However, in accordance with Article 88 of Regulation No 1305/2013, Regulation No 1698/2005 was to continue to apply to operations implemented pursuant to programmes approved by the European Commission under that regulation before 1 January 2014. Recital 61 of Regulation No 1698/2005 stated: ‘In accordance with the principle of subsidiarity and subject to exceptions, there should be national rules on the eligibility of expenditure.’ Article 1 of that regulation, entitled ‘Scope’, provided: ‘This Regulation: 1) lays down the general rules governing Community support for rural development, financed by the [European Agricultural Fund for Rural Development (EAFRD)] … 2) defines the Objectives to which rural development policy is to contribute; … 4) defines the priorities and measures for rural development; …’ Article 2(c) and (d) of that regulation contained the following definitions: ‘(c) “axis”: a coherent group of measures with specific goals resulting directly from their implementation and contributing to one or more of the objectives set out in Article 4; (d) “measure”: a set of operations contributing to the implementation of an axis …’ Article 15 of that regulation, entitled ‘Rural development programmes’, was worded as follows: ‘1. The EAFRD shall act in the Member States through rural development programmes. These programmes implement a rural development strategy through a set of measures grouped together in accordance with the axes defined in Title IV, for the achievement of which aid from the EAFRD will be sought. Each rural development programme shall cover a period between 1 January 2007 and 31 December 2013. 2. A Member State may submit either a single programme for its entire territory or a set of regional programmes. 3. Member States with regional programmes may also submit for approval a national framework containing common elements for these programmes.’ Article 16 of Regulation No 1698/2005, entitled ‘Content of programmes’, provided, in point (c) thereof: ‘Each rural development programme shall include: … (c) information on the axes and measures proposed for each axis and their description …’ Article 18 of that regulation, entitled ‘Preparation and approval’, provided: ‘1. Rural development programmes shall be established by a Member State following close cooperation with the partners referred to in Article 6. 2. Member States shall submit to the Commission a proposal for each rural development programme, containing the information mentioned in Article 16. 3. The Commission shall assess the proposed programmes on the basis of their consistency with the [European] Community strategic guidelines, the national strategy plan and this Regulation. Where the Commission considers that a rural development programme is not consistent with the Community strategic guidelines, the national strategy plan or this Regulation, it shall request the Member State to revise the proposed programme accordingly. 4. Each rural development programme shall be approved in accordance with the procedure referred to in Article 90(2).’ Article 20 of that regulation, entitled ‘Measures’, was worded as follows: ‘Support targeting the competitiveness of the agricultural and forestry sector shall concern: (a) measures aimed at promoting knowledge and improving human potential through: … (ii) setting up of young farmers; …’ Article 22 of that regulation, entitled ‘Setting up of young farmers’, provided, in paragraph 1 thereof: ‘Support provided for in Article 20(a)(ii), shall be granted to persons who: (a) are less than 40 years of age and are setting up for the first time on an agricultural holding as head of the holding; (b) possess adequate occupational skills and competence; (c) submit a business plan for the development of their farming activities.’ Article 71 of Regulation No 1698/2005, entitled ‘Eligibility of expenditure’, provided: ‘1. Without prejudice to Article 39(1) of [Council] Regulation (EC) No 1290/2005 [of 21 June 2005 on the financing of the common agricultural policy (OJ 2005 L 209, p. 1)], expenditure shall be eligible for a EAFRD contribution if the relevant aid is actually paid by the paying agency between 1 January 2007 and 31 December 2015. Co-financed operations should not be completed before the eligibility starting date. … 2. Expenditure shall be eligible for a EAFRD contribution only where incurred for operations decided on by the Managing Authority of the programme in question or under its responsibility, in accordance with the selection criteria fixed by the competent body. 3. The rules on eligibility of expenditure shall be set at national level, subject to the special conditions laid down by this Regulation for certain rural development measures. …’ Regulation (EC) No 1974/2006 Commission Regulation (EC) No 1974/2006 of 15 December 2006 laying down detailed rules for the application of Council Regulation (EC) No 1698/2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) (OJ 2006 L 368, p. 15), was repealed by Commission Delegated Regulation (EU) No 807/2014 of 11 March 2014 supplementing Regulation (EU) No 1305/2013 of the European Parliament and of the Council on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) and introducing transitional provisions (OJ 2014 L 227, p. 1). However, in accordance with Article 19 of Delegated Regulation No 807/2014, Regulation No 1974/2006 was to continue to apply to operations implemented pursuant to programmes approved by the Commission under Regulation No 1698/2005 before 1 January 2014. Point 5 of Title A of Annex II to Regulation No 1974/2006, which, in line with Article 16(c) of Regulation No 1698/2005, set out the information to be included in rural development programmes, contained inter alia the following information: ‘5.3. Information required for Axes and measures … 5.3.1.1.2. Setting up of young farmers – the definition of “setting up” used by the Member State/region, …’ Regulation No 1306/2013 Article 56 of Regulation No 1306/2013, entitled ‘Provisions specific to the EAFRD’, provides, in the first paragraph thereof: ‘Where irregularities or negligence are detected in rural development operations or programmes, Member States shall make financial adjustments by totally or partially cancelling the Union financing concerned. Member States shall take into consideration the nature and gravity of the irregularities detected and the level of the financial loss to the EAFRD.’ Article 63 of that regulation, entitled ‘Undue payments and administrative penalties’, provides: ‘1. Where it is found that a beneficiary does not comply with the eligibility criteria, commitments or other obligations relating to the conditions for the granting of the aid or support, as provided for in the sectoral agricultural legislation, the aid shall not be paid or shall be withdrawn in full or in part and, where relevant, the corresponding payment entitlements as referred to in Article 21 of Regulation [No 1307/2013] shall not be allocated or shall be withdrawn. 2. Moreover, where sectoral agricultural legislation so provides, Member States shall also impose administrative penalties, in accordance with the rules laid down in Article 64 and Article 77. This shall be without prejudice to the provisions set out in Articles 91 to 101 of Title VI. …’ Article 64 of that regulation, entitled ‘Application of administrative penalties’, is worded as follows: ‘1. As regards the administrative penalties referred to in Article 63(2), this Article shall apply in cases of non-compliance in relation to eligibility criteria, commitments or other obligations resulting from the application of sectoral agricultural legislation, with the exception of those referred to in Articles 67 to 78 of Chapter II of this Title and in Articles 91 to 101 of Title VI and of those subject to the penalties provided for in Article 89(3) and 89(4). 2. No administrative penalty shall be imposed: … (e) where the non-compliance is of a minor nature, including where expressed in the form of a threshold, to be set by the Commission in accordance with point (b) of paragraph 7; … 4. The administrative penalties may take one of the following forms: (a) a reduction in the amount of aid or support to be paid in relation to the aid application or payment claim affected by the non-compliance or further applications; however as regards rural development support, this shall be without prejudice to the possibility of suspending the support where it can be expected that the non-compliance can be addressed by the beneficiary within a reasonable time; (b) payment of an amount calculated on the basis of the quantity and/or the period concerned by the non-compliance; (c) suspension or withdrawal of an approval, recognition or authorisation; (d) exclusion from the right to participate in or benefit from the aid scheme or support measure or other measure concerned; 5. The administrative penalties shall be proportionate and graduated according to the severity, extent, duration and reoccurrence of the non-compliance found, and shall respect the following limits: (a) the amount of the administrative penalty as referred to in point (a) of paragraph 4 shall not exceed 200% of the amount of the aid application or payment claim; (b) notwithstanding point (a), as regards rural development, the amount of the administrative penalty, as referred to in point (a) of paragraph 4, shall not exceed 100% of the eligible amount; (c) the amount of the administrative penalty, as referred to in point (b) of paragraph 4, shall not exceed an amount comparable to the percentage referred to in point (a) of this paragraph; …’ Article 77 of Regulation No 1306/2013, entitled ‘Application of administrative penalties’, provides for such penalties in the case of non-compliance with relation to eligibility criteria, commitments or other obligations resulting from the application of the rules on one of those supports. Delegated Regulation (EU) 640/2014 Commission Delegated Regulation (EU) No 640/2014 of 11 March 2014 supplementing Regulation (EU) No 1306/2013 of the European Parliament and of the Council with regard to the integrated administration and control system and conditions for refusal or withdrawal of payments and administrative penalties applicable to direct payments, rural development support and cross compliance (OJ 2014 L 181, p. 48), provides, in Article 35 thereof, entitled ‘Non-compliance with the eligibility criteria other than the size of area or number of animals, commitments or other obligations’: ‘1. The support claimed shall be refused or withdrawn in full where the eligibility criteria are not complied with. 2. The support claimed shall be refused or be withdrawn in full or in part where the following commitments or other obligations are not complied with: (a) commitments established in the rural development programme; or (b) where relevant, other obligations of the operation established by Union or national law or established in the rural development programme, in particular public procurement, State aid and other obligatory standards and requirements. 3. When deciding on the rate of refusal or withdrawal of support following the non-compliance with the commitments or other obligations referred to in paragraph 2, the Member State shall take account of the severity, extent, duration and reoccurrence of the non-compliance related to conditions for support referred to in paragraph 2. The severity of the non-compliance shall depend, in particular, on the importance of the consequences of the non-compliance, taking into account the objectives of the commitments or obligations that were not met. The extent of the non-compliance shall depend, in particular, on its effect on the operation as a whole. The duration shall depend, in particular, on the length of time for which the effect lasts or the possibility of terminating this effect by reasonable means. The reoccurrence shall depend on whether similar non-compliances have been found earlier during the last four years or during the whole programming period 2014-2020 in case of the same beneficiary and the same measure or type of operation or in the case of the programming period 2007-2013, the similar measure. …’ Hungarian law Article 56/C(6) of the a mezőgazdasági, agrár-vidékfejlesztési, valamint halászati támogatásokhoz és egyéb intézkedésekhez kapcsolódó eljárás egyes kérdéseiről szóló 2007. évi XVII. törvény (Law No XVII of 2007 on specific aspects of the procedure relating to support for agriculture, rural development and fisheries and other measures) provides: ‘In proceedings before the agricultural and rural development support body, subject to the provisions of Article 56/B, it shall not be possible to waive or reduce the debt of the person concerned (undue benefit from the measure, interest, compensation for late payment).’ Article 3(1) of the az Európai Mezőgazdasági Vidékfejlesztési Alapból a fiatal mezőgazdasági termelők indulásához a 2015. évben igényelhető támogatások részletes feltételeiről szóló 24/2015. (IV. 28.) MvM rendelet (Jogcímrendelet) (Decree 24/2015 (IV. 28.) of the Minister heading the Prime Minister’s Office on the detailed conditions for the provision of support for the setting up of young farmers in 2015 from the European Agricultural Fund for Rural Development (decree-title) (‘Decree 24/2015’), provides: ‘An application for support may be made by a natural person who: (a) at the time of submission of the application for support, is over 18 but less than 40 years of age; (b) at the time of submission of the application for support, is in possession of: (ba) at least one of the professional qualifications referred to in Annex 1, (bb) at least one of the degrees obtained upon completion of the courses referred to in Annex 2, or (bc) a qualification or diploma obtained abroad which attests to a professional qualification or degree within the meaning of points (ba) or (bb) and which has been recognised or validated in accordance with the Law on the recognition of foreign qualifications and diplomas; (c) submits to the [Mezőgazdasági és Vidékfejlesztési Hivatal (Office for Agriculture and Rural Development, Hungary)] a business plan for the implementation of his or her agricultural activities, including [a standard margin contribution] form and a financial plan …; and (d) undertakes to set up an agricultural holding for the first time and to manage it personally as head of the holding, irrespective of the operating period.’ Under Article 4(1) of that decree: ‘The person concerned shall: (a) manage the holding and contribute personally to such management; (b) work continuously as a farmer, as his or her main activity and as a sole trader, from the date of submission of the application for payment of 90% of the support until the end of the operating period; …’ Article 11(1) of that decree provides: ‘If, following an inspection, the [Magyar Államkincstár (Hungarian State Treasury)] finds that the beneficiary of the support does not comply with Article 4(1)(a) or (b), his or her entitlement to participate in the support scheme shall be extinguished and the support in its entirety shall be deemed to have been unduly obtained.’ Article 13 of that decree is worded as follows: ‘This Decree lays down the provisions necessary for the implementation of Regulation [No 1698/2005].’ The dispute in the main proceedings and the questions referred for a preliminary ruling On 1 June 2015, X submitted, on the basis of Decree 24/2015, an application for support for the setting up of young farmers under the EAFRD to the Office for Agriculture and Rural Development, the predecessor of the Hungarian State Treasury for processing such applications. In her application, in accordance with the requirements laid down in Article 3(1) and Article 4(1) of Decree 24/2015, X undertook to set up a new agricultural holding, to manage that holding personally and to work as a farmer, as her main activity and as a sole trader, from the date of submission of the application for payment of 90% of the support, namely 20 October 2015, until the end of the operating period, namely 31 December 2020. On the basis of that application, the amount of support granted to X was fixed at the equivalent of EUR 40 000 and then, in response to the application for payment of 90% of that amount, support of 11 359 440 Hungarian forints (HUF) (EUR 36 000) was paid to her. It is apparent from the documents before the Court that that support for the setting up of young farmers was granted under Hungary’s rural development programme for the 2007-2013 programming period and that that programme had been approved by the Commission on 19 September 2007. On 28 August 2020, X submitted an application for payment of the remaining 10% of the amount of support granted. That application was refused by a decision of the Hungarian State Treasury, which also ordered the repayment of the amount of HUF 11 359 440 (EUR 36 000) paid in 2015, on the ground that it had been unduly obtained by X. In its decision, the Hungarian State Treasury stated that X had not exercised an agricultural activity as her main activity throughout the period in respect of which the support was granted, since, between 12 September 2017 and 7 March 2018, her main activity had been registered in the register of sole traders as photocopying and reproduction. Thus, the Hungarian State Treasury found that X had infringed Article 4(1)(b) of Decree 24/2015 and that, consequently, in accordance with Article 11(1) of that decree, her entitlement to participate in the support scheme had been extinguished and the entirety of the support paid was deemed to have been unduly obtained. Following an administrative complaint lodged by X, the Minister for Agriculture upheld the decision of the Hungarian State Treasury. The legal action by which X sought the annulment of those two administrative decisions was dismissed by the Debreceni Törvényszék (Debrecen High Court, Hungary). X therefore brought an appeal on a point of law before the Kúria (Supreme Court, Hungary), the referring court. That court considers that the provisions of Regulation No 1698/2005, which was repealed on 1 January 2014, are not relevant to the resolution of the dispute before it, given that the application for support was submitted by X in June 2015. It adds that the requirement that the applicant for support must work continuously as a farmer, as his or her main activity and as a sole trader, until the end of the operating period, cannot be regarded as a criterion relating to knowledge or training for the purposes of Article 50(3) of Regulation No 1307/2013, and infers therefrom that that requirement cannot be included in the eligibility conditions. Furthermore, according to the referring court, in view of the minor nature of the irregularity at issue in the main proceedings, a penalty reduced to 10% could be applied, which would be determined on the basis of the period concerned by that irregularity, namely 176 days over a total of 5 years. In those circumstances, the Kúria (Supreme Court) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling: ‘(1) Must Article 50(3) of Regulation [No 1307/2013] be interpreted as allowing a Member State to lay down, as an eligibility criterion, the requirement that the beneficiary of the support must work continuously as a farmer, as his or her main activity and as a sole trader, from the date of submission of the application for payment of 90% of the support until the end of the operating period? (2) If the first question is answered in the negative, is that eligibility criterion to be construed as a commitment by the beneficiary? (3) If the second question is answered in the affirmative, must Articles 64(1) and 77(1) of Regulation [No 1306/2013] be interpreted as meaning that, in the event of non-compliance with the commitment, an administrative penalty may be imposed, the amount of which is to be determined, having regard to the principle of proportionality, on the basis of Articles 64(4)(b) and 77(4)(b) of that regulation, that is to say, that those provisions must be interpreted as precluding national legislation which provides for recovery of the support in full, without account being taken of the period concerned by the non-compliance? (4) Must Articles 64(2)(e) and 77(2)(e) [of Regulation No 1306/2013] be interpreted as meaning that “non-compliance of a minor nature” includes a situation in which the beneficiary of the support failed to comply for 176 days, over the 5-year period of the commitment, with the requirement relating to the continued exercise of the activity as his or her main activity, taking into account the fact that, throughout that period, he or she exercised only an agricultural activity, from which his or her income was derived?’ Consideration of the questions referred Preliminary observations According to settled case-law, in the procedure laid down by Article 267 TFEU providing for cooperation between national courts and the Court of Justice, it is for the latter to provide the national court with an answer which will be of use to it and enable it to decide the case before it. To that end, the Court should, where necessary, reformulate the questions referred to it. The Court may also find it necessary to consider provisions of EU law which the national court has not referred to in its questions (judgment of 7 September 2023, Groenland Poultry , C‑169/22, EU:C:2023:638 , paragraph 47 and the case-law cited). In the present case, it should be noted that the questions referred concern the provisions of Regulation No 1307/2013, with regard to the conditions of eligibility for support for the setting up of young farmers laid down by national law, and the provisions of Regulation No 1306/2013, with regard to the recovery of the amount of that support for failure to comply with the obligations imposed on the beneficiaries of such support. As is apparent from the request for a preliminary ruling, X submitted an application for support for the setting up of young farmers that was financed by the EAFRD and that support was granted under a national rural development programme. In those circumstances, the provisions of EU legislation relating to rural development measures, namely those of Regulation No 1698/2005 or those of Regulation No 1305/2013, may apply ratione materiae to the dispute in the main proceedings. In that regard, it is apparent from the documents before the Court that the support for the setting up of young farmers at issue in the main proceedings was granted under Hungary’s rural development programme for the 2007-2013 programming period and that that programme had been approved by the Commission on 19 September 2007. In accordance with Article 88 of Regulation No 1305/2013, which repealed Regulation No 1698/2005, the latter regulation continues to apply to operations implemented pursuant to programmes approved by the Commission under that regulation before 1 January 2014. Similarly, in accordance with Article 19 of Delegated Regulation No 807/2014, which repealed Regulation No 1974/2006, the latter regulation continues to apply to operations implemented pursuant to programmes approved by the Commission under Regulation No 1698/2005 before 1 January 2014. Given that, in the present case, it is not disputed that the application for support at issue in the main proceedings was made under Decree 24/2015, Article 13 of which states that that decree lays down the provisions necessary for the implementation of Regulation No 1698/2005, and that the issue in the main proceedings is the obligation to work as a farmer, as a main activity and as a sole trader, from the date of submission of the application for payment of 90% of the support until the end of the operating period, provided for in Article 4(1)(b) of that decree, that obligation and the circumstances of the failure to comply with it must be assessed in the light of the provisions of that regulation and of Regulation No 1974/2006 (see, to that effect, judgment of 18 January 2024, Askos Properties , C‑656/22, EU:C:2024:56 , paragraph 39 and the case-law cited). However, where the recovery of sums unduly paid in the context of an aid programme, approved and co-financed by the EAFRD for the 2007-2013 programming period, takes place after the programming period has come to an end, namely after 1 January 2014, recovery must be based on the provisions of Regulation No 1306/2013 (see, to that effect, judgment of 18 January 2024, Askos Properties , C‑656/22, EU:C:2024:56 , paragraph 40 and the case-law cited). The first question In the light of those preliminary observations, it must be held that, by its first question, the referring court asks whether Article 22(1) and Article 71(3) of Regulation No 1698/2005 must be interpreted as allowing a Member State to impose a condition of eligibility for support for the setting up of young farmers according to which the beneficiary of that support is required to work as a farmer as his or her main activity, from the date of submission of the application for payment of 90% of the amount of that support until the end of the operating period of that activity. Under Article 71(3) of Regulation No 1698/2005, the rules on eligibility of expenditure are to be set at national level, subject to the special conditions laid down by that regulation for certain rural development measures. In accordance with Article 22(1) of that regulation, support for the setting up of young farmers is to be granted to persons who are less than 40 years of age, who are setting up for the first time on an agricultural holding as head of the holding, who possess adequate occupational skills and competence and who submit a business plan for the development of their farming activities. It follows from settled case-law that Member States may adopt rules for the application of a regulation if they do not obstruct its direct applicability and do not conceal its nature as EU law, and if they specify that a discretion granted to them by that regulation is being exercised, provided that they adhere to the parameters laid down under it (judgment of 25 October 2012, Ketelä , C‑592/11, EU:C:2012:673 , paragraph 36 and the case-law cited). It is by referring to the relevant provisions of the regulation concerned, interpreted in the light of the objectives of that regulation, that it may be determined whether they prohibit, require or allow Member States to adopt certain measures of application and, particularly in the latter case, whether the measure concerned comes within the scope of the discretion that each Member State is recognised as having (judgment of 25 October 2012, Ketelä , C‑592/11, EU:C:2012:673 , paragraph 37 and the case-law cited). It is clear from recital 61 and Article 71(3) of Regulation No 1698/2005 that, while the rules on eligibility of expenditure are set, as a general rule, at national level, that is the case only subject to the special conditions laid down under that regulation for certain rural development measures (judgment of 25 October 2012, Ketelä , C‑592/11, EU:C:2012:673 , paragraph 38). The support for the setting up of young farmers is such a measure and the eligibility conditions laid down by Article 22(1) of that regulation are special conditions for that measure (see, to that effect, judgment of 25 October 2012, Ketelä , C‑592/11, EU:C:2012:673 , paragraph 39). It follows that the Member States are free to lay down additional conditions for the eligibility of expenditure incurred in the implementation of Regulation No 1698/2005, provided that those conditions are not contrary to those laid down in Article 22 of that regulation or to its effectiveness. As regards the objectives pursued by that regulation, it should be recalled that that regulation aims, by means of the aid concerned, to facilitate the establishment of young farmers and, subsequently the structural adjustment of the holding, with a view to enhancing human potential and improving the competitiveness of the agricultural and forestry sectors and to contribute in such a way as to ensure the sustainable development of rural areas (see, to that effect, judgment of 25 October 2012, Ketelä , C‑592/11, EU:C:2012:673 , paragraph 40). As regards whether an eligibility condition, such as that laid down in Decree 24/2015, requiring the beneficiary of support for the setting up of young farmers to work as a farmer as his or her main activity until the end of the operating period complies with Regulation No 1698/2005, it is apparent from Articles 15, 16 and 18 of that regulation that the Member States themselves were to draw up their rural development programmes relating to the financing to be put in place under that regulation and that only a programme corresponding to that regulation was to be approved by the Commission. In that context, it remained open to the Member States, inter alia, to lay down, for the grant of support financed by the EAFRD, eligibility conditions additional to those laid down in Regulation No 1698/2005, provided that, in so doing, they specified that they were acting in exercise of a discretion granted to them under that regulation and that they adhered to the parameters laid down thereunder (judgment of 15 May 2014, Szatmári Malom , C‑135/13, EU:C:2014:327 , paragraph 60). In that regard, it should be noted, first, that Article 22(1)(a) of Regulation No 1698/2005 lays down as a condition for support for the setting up of young farmers that the person concerned must be setting up ‘as head of the holding’, requiring in essence that that person has effective and long-term control and management of the agricultural holding (see, to that effect, judgment of 25 October 2012, Ketelä , C‑592/11, EU:C:2012:673 , paragraph 55). Second, the first indent of point 5.3.1.1.2 of Title A of Annex II to Regulation No 1974/2006 provides that, with regard to support for the setting up of young farmers, rural development programmes established by the Member States are to define the concept of ‘setting up’ used by the Member State concerned or the region concerned. It must be stated that neither those provisions nor the objectives pursued by Regulation No 1698/2005 preclude national legislation from establishing, as a condition of eligibility for support for the setting up of young farmers, that the beneficiary of that support must work as a farmer as his or her main activity until the end of the operating period of that activity. That condition adheres to the parameters laid under those provisions, while specifying the requirements resulting therefrom. It must therefore be considered that the imposition of such an additional condition of eligibility for support for the setting up of young farmers falls within the discretion granted to the Member States by Article 71(3) of Regulation No 1698/2005. In the light of the foregoing, the answer to the first question is that Article 22(1) and Article 71(3) of Regulation No 1698/2005 must be interpreted as allowing a Member State to impose a condition of eligibility for support for the setting up of young farmers according to which the beneficiary of that support is required to work as a farmer as his or her main activity, from the date of submission of the application for payment of 90% of the amount of that support until the end of the operating period of that activity. The second and third questions In the light of the preliminary observations set out in paragraphs 38 to 45 of the present judgment, it must be held that, by its second and third questions, which it is appropriate to examine together, the referring court asks whether Article 63(1) of Regulation No 1306/2013 and Article 35(1) to (3) of Delegated Regulation No 640/2014 must be interpreted as meaning that, first, a condition of eligibility for support for the setting up of young farmers, laid down by the legislation of a Member State, according to which the beneficiary of that support is required to work as a farmer as his or her main activity, from the date of submission of the application for payment of 90% of the amount of that support until the end of the operating period of that activity, constitutes an ‘eligibility criterion’ or a ‘commitment’ within the meaning of those provisions, and, second, those provisions preclude non-compliance with such a commitment from resulting in that beneficiary being required to repay the full amount of the support, without account being taken, inter alia, of the duration of the period concerned by that non-compliance. Under Article 63(1) of Regulation No 1306/2013, where it is found that a beneficiary does not comply with the eligibility criteria, commitments or other obligations relating to the conditions for the granting of the aid or support, as provided for in the sectoral agricultural legislation, the aid is not to be paid or is to be withdrawn in full or in part and, where relevant, the corresponding payment entitlements as referred to in Article 21 of Regulation No 1307/2013 are not to be allocated or are to be withdrawn. Article 35 of Delegated Regulation No 640/2014 provides, in paragraph 1 thereof, that the support claimed is to be refused or withdrawn in full where the eligibility criteria for that support are not complied with and, in paragraph 3 thereof, that, when deciding on the rate of refusal or withdrawal of support following the non-compliance with the commitments or other obligations referred to in paragraph 2 of that Article 35, the Member State is to take account of the severity, extent, duration and reoccurrence of the non-compliance related to conditions for support referred to in that paragraph 2. The concepts of ‘eligibility criterion’ and ‘commitment’ are not defined either by Regulation No 1306/2013 or by Delegated Regulation No 640/2014. It is apparent from the usual meaning of those words and from the context in which they are used in those regulations that, in the field of rural development financed by the EAFRD, an ‘eligibility criterion’ must be understood as an indispensable prerequisite for the validity of an application for support, with the result that, if such a prerequisite is not met, the application for support must be rejected, and that a ‘commitment’ refers to the promise made by the applicant for support to comply, subject to the grant of that support, with an obligation, set out in the rural development programme, during the period in which the programme is implemented. The legal consequences of non-compliance differ depending on whether it concerns an ‘eligibility criterion’ or a ‘commitment’. It follows from paragraphs 1 to 3 of Article 35 of Delegated Regulation No 640/2014, provisions which clarify Article 63(1) of Regulation No 1306/2013, that, where an ‘eligibility criterion’ is not complied with, the support is to be refused or withdrawn in full, whereas, in the case of a ‘commitment’, the support, if it has not yet been paid, is not to be paid or is to be withdrawn in full or in part, taking account of the severity, extent, duration and reoccurrence of the non-compliance. Subject to the verifications which it is for the referring court to carry out, it appears that the obligation to work as a farmer as a main activity, from the date of submission of the application for payment of 90% of the amount of that support until the end of the operating period of that activity, constitutes a ‘commitment’ within the meaning of those provisions. In so far as the referring court considers that that obligation constitutes a ‘commitment’, within the meaning of Article 63(1) of Regulation No 1306/2013 and Article 35(2) of Delegated Regulation No 640/2014, in the event of non-compliance with that commitment, the national authorities would be required to take into account, for the purpose of determining the part of the support for the setting up of young farmers from which X benefited that must be withdrawn, the severity, extent, duration and reoccurrence of the non-compliance, pursuant to Article 35(3) of that delegated regulation. Consequently, the answer to the second and third questions is that Article 63(1) of Regulation No 1306/2013 and Article 35(1) to (3) of Delegated Regulation No 640/2014 must be interpreted as meaning that, first, a condition of eligibility for support for the setting up of young farmers, laid down by the legislation of a Member State, according to which the beneficiary of that support is required to work as a farmer as his or her main activity, from the date of submission of the application for payment of 90% of the amount of that support until the end of the operating period of that activity, may constitute a ‘commitment’ within the meaning of those provisions, and, second, in such a situation, Article 35(2) and (3) of Delegated Regulation No 640/2014 precludes non-compliance with such a commitment from resulting in that beneficiary being required to repay the full amount of the support, without account being taken, inter alia, of the duration of the period concerned by that non-compliance. The fourth question By its fourth question, the referring court asks, in essence, whether Article 64(2)(e) and Article 77(2)(e) of Regulation No 1306/2013 must be interpreted as precluding national legislation under which non-compliance with the commitment given by the beneficiary of the support results in that beneficiary being required to repay the full amount of that support, without account being taken, inter alia, of the duration of the period concerned by that non-compliance. In the light of the fact that such a question has already been answered in the affirmative, on the basis of the relevant provisions of EU law, in the second part of paragraph 70 of the present judgment, there is no need to answer the fourth question. Costs Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable. On those grounds, the Court (Eighth Chamber) hereby rules: 1. Article 22(1) and Article 71(3) of Council Regulation (EC) No 1698/2005 of 20 September 2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) must be interpreted as allowing a Member State to impose a condition of eligibility for support for the setting up of young farmers according to which the beneficiary of that support is required to work as a farmer as his or her main activity, from the date of submission of the application for payment of 90% of the amount of that support until the end of the operating period of that activity. 2. Article 63(1) of Regulation (EU) No 1306/2013 of the European Parliament and of the Council of 17 December 2013 on the financing, management and monitoring of the common agricultural policy and repealing Council Regulations (EEC) No 352/78, (EC) No 165/94, (EC) No 2799/98, (EC) No 814/2000, (EC) No 1290/2005 and (EC) No 485/2008, and Article 35(1) to (3) of Commission Delegated Regulation (EU) No 640/2014 of 11 March 2014 supplementing Regulation (EU) No 1306/2013 of the European Parliament and of the Council with regard to the integrated administration and control system and conditions for refusal or withdrawal of payments and administrative penalties applicable to direct payments, rural development support and cross compliance, must be interpreted as meaning that, first, a condition of eligibility for support for the setting up of young farmers, laid down by the legislation of a Member State, according to which the beneficiary of that support is required to work as a farmer as his or her main activity, from the date of submission of the application for payment of 90% of the amount of that support until the end of the operating period of that activity, may constitute a ‘commitment’ within the meaning of those provisions, and, second, in such a situation, Article 35(2) and (3) of Delegated Regulation No 640/2014 precludes non-compliance with such a commitment from resulting in that beneficiary being required to repay the full amount of the support, without account being taken, inter alia, of the duration of the period concerned by that non-compliance. [Signatures] * Language of the case: Hungarian. i The name of the present case is a fictitious name. It does not correspond to the real name of any of the parties to the proceedings. © European Union The source of this judgment is the Europa web site. The information on this site is subject to a information found here: Important legal notice . This electronic version is not authentic and is subject to amendment. BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII